Stimulus deadlock persists as Senate returns to Washington by Bloomberg

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© Bloomberg. Mitch mcconnell

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(Bloomberg) – The Senate returns to Washington on Tuesday with the Trump administration and Democrats no closer to agreeing on a new virus relief plan than they were when talks broke down in early August – despite the pressure of the American elections in 56 days.

Majority leader Mitch McConnell will try to break the deadlock this week with a slashed $ 500 billion stimulus package that the White House is backing. While that’s half of what the GOP offered at the end of July, McConnell is struggling to get Republicans to fully support him as the party’s newly energized tax hawks are reluctant to add to the estimated deficit. to $ 3.3 trillion in fiscal 2020.

“Hopefully by the end of the week we can start moving forward with this,” Treasury Secretary Steven Mnuchin told Fox News on Sunday. He called the smaller measure “targeted”.

The lean – or targeted – stimulus has already been criticized by House Speaker Nancy Pelosi and Democrats. They have not budged from their proposal for a $ 2.2 trillion relief package that Republicans previously rejected.

In the midst of this, the two sides will negotiate an interim spending measure to prevent a government shutdown when the exercise ends on September 30. Pelosi and Mnuchin have agreed they don’t want the stimulus deadlock to hamper work on the bridge.

Meanwhile, there may be turmoil among grassroots lawmakers facing voters on November 3 to include some economic relief.

McConnell said on Friday that he wanted to get another relief package through Congress, but that it would be “extremely difficult due to the proximity of the elections.”

The Department of Labor’s monthly employment report on Friday, which showed the unemployment rate fell nearly 2 percentage points in August to 8.4%, also eased some of the pressure on Republicans so that they come closer to the plan proposed by the Democrats.

Still, that hasn’t completely erased concerns about the economy. The workforce remains around 11.5 million below pre-pandemic levels, and the number of permanent job losers has risen by more than half a million from last month to 3.41 million. Many companies, from airlines to casinos to the beverage industry, have announced initially laid-off downsizing plans. Ryan Sweet, head of monetary policy research at Moody’s Analytics Inc., said that the United States had to maintain job gains, “but without fiscal stimulus, it will be difficult to do.” Several Federal Reserve officials have hammered this point in recent weeks.

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GOP senators plan to meet behind closed doors on Wednesday to discuss whether to try to get a vote on a smaller relief package. This would allow vulnerable Republicans in the Senate running for re-election to say they have tried to provide economic aid, despite Democratic opposition, when they return home to campaign.

The slashed plan would provide an increase in unemployment benefits of $ 300 per week, $ 105 billion for schools, a $ 10 billion grant to the U.S. Postal Service, funding for the Small Paycheck Protection Program companies, $ 45 billion to the Department of Health and Human Services for vaccines and testing needs, and liability protections for employers.

That would not include another round of $ 1,200 checks to individuals – which President Donald Trump wants – or any aid to states and local governments, a key Democrats request, according to a Republican Senate aide.

Spending problems

Pennsylvania GOP Senator Pat Toomey, skeptical of the benefits of another massive stimulus package, said it would be good for them to reach consensus, but he wants something significantly less than a trillion dollars originally offered by McConnell.

“I’m not a fan of spending a lot more,” Toomey said.

It’s unclear whether McConnell can muster a majority of 51 votes, even for the smallest proposal. He previously said 20 Senate Republicans are against any additional spending.

Senator Deb Fischer of Nebraska told reporters on Friday that Republicans had daily conference calls with Mnuchin and White House Chief of Staff Mark Meadows.

“We will see if we are able to put something together,” she said of a new stimulus proposal. When asked if Republicans would all agree, she replied, “I don’t speak for my colleagues.”

If McConnell tries to jack up the meager bill, it will be just a party messaging exercise. It would take 60 votes to move forward and it would almost certainly be blocked by Senate Democrats, who have 43 votes in the chamber.

Democratic Senate Leader Chuck Schumer has made his opposition clear.

“Republicans may call their proposal ‘skinny’, but it would be more appropriate to call it ’emaciated,’ he wrote in a letter Thursday.

Electoral pressure

The impending election will create pressure points for Trump as well as incumbents in the House and Senate. The White House is pushing for stimulus payments to go to individuals ahead of the November 3 election.

“Look, nobody wants to give direct payments to American families more than President Donald Trump,” Vice President Mike Pence said on CNBC Friday.

Immediately before their August recess, two Senate Republicans, who followed their Democratic opponents in the polls – Susan Collins of Maine and Martha McSally of Arizona – helped introduce a bill that called for an increase in unemployment benefits. higher than that of the reduced proposition.

In the House, meanwhile, Democrats in vibrant neighborhoods are poised to step up their pressure on Pelosi to get a deal. The moderate Blue Dog coalition sent the President a letter Aug. 21 asking for a compromise, and vulnerable first-term Iowa Democrat Cindy Axne followed up last week with a letter asking for action on a smaller package.

A key decision for Pelosi and other Democratic leaders is the timing of a temporary resolution of government spending.

Mnuchin said on Sunday he expected a tentative deal to be reached in early December, although details have not been worked out.

“The most important thing is to make sure that at the end of the month we don’t shut down the government and we get something after the election.”

But some Democrats are pushing for a stopgap in early 2021, to avoid the possibility of having to negotiate with a lame president if Trump loses.

“Frankly, shutting down the government in November and December is a much more acceptable risk for them – if the scenario is that they lose a majority in the White House and Senate in January,” said Democratic Representative Gerry Connolly of Virginia. about Republicans.

Connolly said Democrats lost influence by agreeing to separate the interim bill and the stimulus talks.

Connecticut Democratic Representative Jim Himes said he believed Trump would ultimately push for a deal with Democrats later this month if he was still behind Democrat Joe Biden in the polls.

“The President of the United States understands one thing and maybe only one thing, and that’s what’s good for him personally,” he said. “And it’s good for him personally to make some sort of agreement.”

© 2020 Bloomberg L.P.

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